The study is being conducted to determine the safety and effectiveness of aminoguanidine in protecting kidney function in patients with insulin-dependent diabetes and abnormal kidney function. A high blood sugar level for prolonged periods can lead to irreversible tissue damage by interacting with other chemicals normally present in the body. One such reaction with certain proteins lead to the accumulation of long-lived abnormal proteins called advanced glycosylation end-products or AGE's. These substances have been implicated in causing some of the complications of diabetes including eye and kidney disease. Aminoguanidine is an investigational medication which can prevent the reaction of sugar with these proteins. In doing so, tissue accumulation of AGE's are reduced and in animal models, this is associated with prevention or attenuation of some of the complications of diabetes mellitus. Patients with insulin-dependent diabetes mellitus and a duration of disease of at least 7 years who have kidney involvement from diabetes will be considered. This is a multi-center, randomized, double blind, placebo controlled trial. Eligible patients will be randomized to receive either the study drug or a placebo. The estimated study period is approximately 3 years. The last patient randomized will be treated for 2 years and the maximum duration of treatment is 4 years. The primary endpoint is the doubling of serum creatinine (a serum marker of kidney function). Secondary objectives are 1. the effect on circulating AGE's 2. the relationship between AGE's and primary and secondary endpoints and 3. the effect on the quality of life.